MESA LABORATORIES INC /CO/

Mesa**** Laboratories, Inc.**

Notes to Condensed Consolidated Financial Statements

(unaudited)

(dollar and share amounts in thousands, unless otherwise specified)

Note*1***.Description of Business andSummary ofSignificantAccounting Policies**

Description of Business

In this Quarterly Report on Form10-Q, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries, is collectively referred to as “we,” “us,” “our,” the “Company,” or “Mesa.”

We are a global leader in the design and manufacture of life sciences tools and critical quality control solutions for regulated applications in the pharmaceutical, healthcare and medical device industries. We offer products and services to help our customers ensure product integrity, increase patient and worker safety, and improve the quality of life throughout the world. We have manufacturing operations in the United States and Europe, and our products are marketed by our sales personnel in North America, Europe and the Asia Pacific region, and by independent distributors throughout the world.

As of* June 30, 2026*, we managed our operations infour reportable segments, or divisions:

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. In the opinion of management, such unaudited information includes all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of our financial position and results of operations. The results of operations for interim periods arenot necessarily indicative of results that* maybe achieved for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but doesnot* include all disclosures required by U.S. GAAP. The Condensed Consolidated Financial Statements include the accounts of Mesa and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We have madeno material changes to the application of significant accounting policies disclosed in our Annual Report on Form10-K for the fiscal year ended* March 31, 2026*. This report should be read in conjunction with the consolidated financial statements included in that report.

Our fiscal year ends on* March**31.* References in this report to a particular “year” or “quarter” refer to our fiscal year or fiscal quarters, respectively. Unless otherwise indicated, amounts shown in this report are in thousands.

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Risks and Uncertainties

The preparation of financial statements requires the use of estimates and assumptions that affect reported amounts of assets and liabilities at the reporting date and revenue and expenses during the reporting periods. These estimates represent management's judgment about the outcome of future events. The global business environment continues to be impacted by cost pressures, economic uncertainties, regulatory changes and other factors. Changes in, and the resulting effects of, potential government trade, stimulus or fiscal and monetary policies, interest rates, foreign currency values, supply chains, demand for goods and services, global or regional recession, or other circumstances cannot be reliably predicted. Actual results could differ from our estimates. Refer to Item1A. Risk Factorsin our Annual Report on Form10-K for the fiscal year ended* March 31, 2026*.

Recent Accounting Pronouncements

We have reviewed all recently issued accounting pronouncements and have concluded that, other than as described below, they arenot applicable to us or arenot expected to have a material impact on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

In* July 2025,the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU")2025-05, Financial Instruments—Credit Losses (Topic326): Improvements to the Measurement of Credit Losses for Receivables and Contract Assets*. ASU2025-05 introduces a practical expedient that removes the requirement to incorporate macroeconomic forecasts into the estimation of expected credit losses. The guidance is effective for fiscal years beginning after* December 15, 2025,including interim periods within those fiscal years. We adopted the ASU effective April 1, 2026on a prospective basis and elected the practical expedient allowing us to assume conditions as of the balance sheet date will remain unchanged for the remaining life of the asset. This adoption didnot* have a material impact on our consolidated financial statements, allowance for credit losses or related disclosures.

In* September 2025,the FASB issued ASU2025*-06, Intangibles—Goodwill and Other (Topic350*): Internal-Use Software*. ASU2025-06 modernizes accounting for costs incurred in the development of internal-use software by eliminating the requirement to evaluate distinct development stages. The guidance is effective for fiscal years beginning after* December 15, 2027,including interim periods within those fiscal years. ASU2025*-06 permits prospective, retrospective or modified retrospective adoption. Early adoption is permitted as of the beginning of an entity's annual reporting period. We early adopted the ASU effective* April 1, 2026,on a prospective basis. This adoption didnot* have a material impact on our consolidated financial statements or related disclosures.

Recently Issued Accounting Pronouncements

In* November 2024,the FASB issued ASU2024*-03, Expense Disaggregation Disclosures (Subtopic220*-40): Disaggregation of Income Statement Expenses.ASU2024*-03 requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The ASU is effective for fiscal years beginning after* December 15, 2026 (our fiscal year2028* for annual periods) and interim periods within fiscal years beginning after* December 15, 2027 (our fiscal year2029* for interim periods), with early adoption and prospective or retrospective application permitted. We intend to adopt ASU2024-03 prospectively, and we expect to disclose additional detail regarding the nature and classification of certain categories of expense once adopted.

Note2. Revenue

We develop, manufacture, market, sell and maintain life sciences tools and quality control instruments and related consumables.

Hardware sales include physical products such as instruments used for molecular and genetic analysis, protein synthesizers, medical meters, wireless sensor systems, data loggers, and process challenge devices. Hardware* may*be offered with accompanying perpetual or annual software licenses, which in some cases are required for the hardware to function.

Consumables are single-use products requiring frequent replacement in our customers' operating cycles. Consumables sold by our Clinical Genomics and Biopharmaceutical Development divisions, such as reagents used for molecular and genetic analysis or solutions used for protein synthesis, are critical to the ongoing use of our instruments. Consumables such as biological and chemical indicator test strips sold by our Sterilization and Disinfection Control division are used on a standalone basis.

Revenue from hardware and consumables are recognized upon transfer of control to the customer. Control of hardware and consumables sold in the U.S. and Asia Pacific typically transfers at the point of shipment, whereas control of products sold in Europe more typically occurs upon delivery to the customer site.

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We also offer maintenance, calibration and testing services. Services result in revenue recognized either over time, for example, when we are contractually obligated to perform labor and replace parts on an as-needed basis throughout a specified service period, or at a point in time, upon completion of a specific, discrete service.

We disclose revenue consistently with how management evaluates the business, i.e., based on business unit and the nature of goods and services provided.

The following tables present disaggregated revenue for the quarters ended* June 30, 2026and2025,* respectively:

Revenue from external customers are attributed to individual countries based on the locations to which the products are shipped or exported, or locations where services are performed, as follows:

No foreign country exceeded10% of total revenue for the quarter ended* June 30, 2026*.

Contract Liabilities

Our contracts have varying payment terms and conditions. Some customers prepay for products and services, resulting in contract liabilities recorded as unearned revenue or within other noncurrent liabilities in our unaudited Condensed Consolidated Balance Sheets. The significant majority of our revenue, related receivables and contract liabilities arise from contracts with original durations oftwelve months or less. Contract liabilities are recognized as revenue as we satisfy our obligations under the terms of the contracts.

A summary of contract liabilities is as follows:

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Note3. Fair Value Measurements and Concentrations of Credit Risk

Our financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable, and debt. Due to their short-term nature, the carrying values of cash and cash equivalents, trade accounts receivable and trade accounts payable approximate fair value and are classified within Level1 of the fair value hierarchy.

The carrying amounts of our term loan and revolving line of credit (together, the "Credit Facility") approximate fair value due to variable interest rate pricing, with the balances bearing interest rates approximating current market rates.

There wereno nonrecurring fair value adjustments or transfers between the levels of the fair value hierarchy during the quarter ended* June 30, 2026*.

The financial instruments that subject us to the highest concentrations of credit risk are cash and accounts receivable. We maintain relationships and cash deposits at multiple banking institutions across the world in an effort to diversify cash holdings and reduce risk of loss. Concentration of credit risk with respect to accounts receivable is limited to customers to whom we make significant sales. No customers accounted for more than10% of total trade receivables as of* June 30, 2026*.

Note4. Supplemental Information

Inventories consisted of the following:

Prepaid expenses and other current assets consisted of the following:

Accrued payroll and benefits consisted of the following:

Other accrued expenses consisted of the following:

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Depreciation expense was as follows:

Note5. Goodwill and Intangible Assets

Intangible assets other than goodwill consisted of the following:

Amortization expense for intangible assets was as follows:

Estimated future amortization expense for the following fiscal years ending* March 31is presented below, based on foreign currency exchange rates in effect as of June 30, 2026:*

The change in the carrying amount of goodwill was as follows:

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Note*6***.**** Indebtedness**

Credit Facility

Our secured credit agreement matures in* April 2029*and includes:

Borrowings under our Credit Facility bear interest at a Secured Overnight Financing Rate ("SOFR") rate or a base rate, plus an applicable spread that varies with our total net leverage ratio.

The weighted average interest rate on borrowings under the Credit Facility was 5.6% as of* June 30, 2026* and 5.9% as of* March 31, 2026.*

The financial covenants in the Credit Facility include a maximum total net leverage ratio of 3.5 to1.0 on each quarterly testing date after* March 31, 2026.The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to1.0.* Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes to our business as defined in the contract, engage in certain transactions with affiliates, or conduct asset sales. As of* June 30, 2026*, we were in compliance with all covenants under the Credit Facility.

Term Loan

We are required to make quarterly principal payments on the Term Loan. During the quarter ended* June 30, 2026,we made a required payment of $1,406. For fiscal years ending March 31,*required future debt payments on the Term Loan are as follows:

Unamortized debt issuance costs related to the Term Loan are reflected as a discount to the debt’s carrying value in our unaudited Condensed Consolidated Balance Sheets and are being amortized to interest expense through maturity. The net carrying amount of the Term Loan was as follows:

We recognized interest expense on the Term Loan as follows:

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Revolver

As of* June 30, 2026*, the outstanding balance under the Revolver was $77,250, and $47,750 was available for borrowing. Subsequent to* June 30, 2026*, we repaid an additional$4,000 on the Revolver.

We are obligated to pay quarterly unused commitment fees of between 0.20% and 0.35% of the Revolver’s aggregate principal amount, based on our leverage ratio.

The balance of unamortized customary lender fees related to the Revolver was $934 and $1,018 as of* June 30, 2026* and* March 31, 2026,*respectively.

Convert****ible Notes

On* August 15, 2025,our previously outstanding 1.375% convertible notes (the "Notes") matured. We settled the aggregate principal balance of $97,500 and accrued interest using borrowings under our Revolver and cash on hand. As of June 30, 2025,the Notes had a net carrying value of $97,432. Interest expense recognized in connection with the Notes during thethree* months ended* June 30, 2025*was $470, consisting of coupon interest expense of $335 and amortization of debt issuance costs of $135.

Note7. Stock Transactions and Stock-Based Compensation

Stock-Based Compensation

During thethree months ended* June 30, 2026*, we issued time-based restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs") pursuant to the Amended and Restated Mesa Laboratories, Inc.2021 Equity Incentive Plan (the*"2021* Equity Plan"), which authorizes the issuance of 1,156 shares of common stock to eligible participants.

The following is a summary of RSU and PSU award activity for thethree months ended* June 30, 2026*:

In thethree months ended* June 30, 2026,the Compensation Committee of the Board of Directors (the "Compensation Committee") awarded our CEO a sign-on equity award consisting of 35 RSUs. These RSUs vest in equal installments on April 13, 2027,2028 and2029. Time-based RSUs vest and settle in shares of our common stock on aone-for-one basis. The significant majority of other RSUs granted to employees during thethree months ended June 30, 2026* vest in equal installments on* June 13, 2027,** June 8, 2028and * June 8, 2029.

During thethree months ended* June 30, 2026*, the Compensation Committee awarded 48 PSUs at target (the*"FY27* PSUs") to eligible employees. TheFY27 PSUs are subject to market-based performance conditions measured relative to a selected peer index and service conditions. The market performance measurement period and service period are from* June**15,* 2026 through* June 14, 2029,followed by a mandatorytwo*-year holding period. The number of shares that* maybe earned will range from 0% to 200% of the target number of shares, based on Mesa's relative total shareholder return compared to the selected peer group. If defined minimum targets arenot* met,no shares will vest.

As of* June 30, 2026*, there were 105 shares subject to outstanding options, with a weighted average exercise price per share of $183.18, an intrinsic value of $0 and a remaining contractual life of 1.8 years. Our Compensation Committee hasnot granted options to any plan participants in the current or prior fiscal year.

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Liability Classified PSUs

During thethree months ended* June 30, 2026,liability-classified PSUs were granted to certain key employees. The awards mayvest based on our over-achievement against a challenging threshold for revenue and adjusted operating income targets; the value of shares awarded will range from $0 to approximately $3,000, depending on Company performance. The awards represent a fixed monetary value that will be settled in a variable number of shares and are therefore classified as liabilities. As of June 30, 2026,achievement of performance conditions wasnot* considered probable; as such,no compensation expense or corresponding liability has been recognized in our Condensed Consolidated Financial Statements. Performance is measured from* April 1, 2026to March 31, 2027.Any awards earned will vest in June 2027and be subject to a mandatoryone*-year holding period.

Note*8***.**** Earnings per Share **

The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per share ("EPS"):

(1)Weighted average outstanding shares of common stock includes awards that havenot yet vested and arenot yet legally outstanding, but for whichno vesting criteria other than the passage of time remain. For example, this includes RSUs granted to retirement-eligible employees and certain awards granted to our former CEO that arenot subject to continued service requirements but havenot yet vested.

The following contingently issuable securities were excluded from the calculation of diluted EPS as their inclusion would be anti-dilutive:

Stock awards are potentially dilutive securities and as such are excluded from the calculation of diluted EPS if their inclusion would be anti-dilutive, or if achievement of performance-based thresholds as of our reporting date wouldnot result in the awards vesting.

Note*9***.**** Income Taxes**

We reported an income tax provision as follows:

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For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income. Each quarter, our estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. Additionally, the tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. There is a potential for volatility in the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which they relate, changes in tax laws and foreign tax holidays, settlement with taxing authorities, and foreign currency fluctuations.

The effective tax rate for thethree months ended* June 30, 2026differed from the statutory federal rate of 21% primarily due to the impact of the valuation allowance on U.S. deferred taxes. Given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next12* months, sufficient positive evidence* maybecome available to allow us to reach a conclusion that a significant portion of the valuation allowance willno* longer be needed. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to achieve.

Note*10***.**** Commitments andContingencies**

As of* June 30, 2026*, we arenot party to any legal proceeding that management believes could have a material adverse effect on our unaudited consolidated financial position, results of operations, or cash flows. During thethree months ended* June 30, 2026,we entered into a settlement agreement that resolved previously disclosed litigation involving True Indicating, LLC. Under the terms of the settlement agreement, we paid an insignificant amount to resolve all outstanding matters between the parties, which was recorded in general and administrative expense in our Condensed Consolidated Statements of Income. We haveno* remaining obligations under the agreement.

Note11**.**** Segment Information**

Segment information is prepared on the same basis our chief operating decision maker ("CODM"), our CEO, uses to assess segment performance, allocate resources, evaluate financial results, and make key operating decisions. Ourfour reportable segments are organized primarily by the nature of the goods and services they sell. Our CODM regularly reviews segment-level U.S. GAAP revenue and gross profit relative to forecasted and prior period amounts, as well as non-GAAP adjusted operating expense compared to budgeted amounts. Our CODM also regularly reviews non-GAAP organic revenue growth to support strategic planning and resource deployment.

The following tables set forth our segment information:

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The following table sets forth inventories by reportable segment. Our CODM isnot provided with and doesnot regularly review any other segment asset information.

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